Hulu to Make $500 Million in Revenue in 2011, Doubles Ads

Hulu is on pace to make $500 million in revenue in 2011. Hulu CEO, Jason Kilar announced the news earlier this week on the blog on his premium, on demand streaming video destination. That amount is almost double the estimated $250 million and actual $260 million Hulu grossed in 2010.

So, what’s accounting for the year over year 100% increase in revenue? A few things.

Kilar notes a 50% increase in the amount of advertisers on Hulu, up to 289 in Q1 2011 from 194 in Q1 2010. He also points out the uptick in the number of content partners on Hulu and Hulu Plus, from 211 to 264 during the same time frame. But neither of those two stats matter in terms of revenue unless more people are watching more Hulu.

Well, viewership on Hulu is up, too. Users initiated 10% more streams in Q1 2011 than the previous quarter. And the site is poised to have over 1 million subscribers to the $7.99/month Hulu Plus service by year’s end, up from zero in 2010.

But that 10% increase in streams and the million Hulu Plus subscribers can’t fully account for a 2011 revenue projection of $250 million more

than last year. Let’s say we increase last year’s revenue by 10% to account for Kilar’s reported increase in streams. That’s a $26 million bonus for Hulu. Now add the Hulu Plus revenue of $96 million (1 million subs at $7.99 per month for 12 months) and you get a total $122 million. That’s still $128 million shy of the extra $250 million Hulu’s supposed to take in this year.

So, what’s else is accounting for the year over year 100% increase in revenue? More ads.

ComScore first began tracking video ads in June 2010. During that month the site served 566 million video ads. According to ComScore’s latest numbers from February 2011, Hulu served 1.13 billion video ads, almost a 50% increase over 9 months. That increase in video ads served should cover the $128 million we have left over, easily getting us to Hulu’s $500 million projection.

All those ad breaks roughly every 4 minutes and 37 seconds certainly add up.